These cities have lost the most flights

In the past decade, the U.S. airline industry’s landscape shifted from nine large airlines to four mega-carriers that make up a combined 80% of all U.S. flights.

One consequence of the industry’s consolidation is a cut-back in flight schedules over the past four years that has resulted in an approximately 7% decrease in overall flights, according to a Wall Street Journal report.

The flight cuts haven’t been distributed equally. Airports that are frequently used as hubs to connect flights rather than as final destinations — such as Memphis and Cleveland — saw the number flights shrink 66% and 44.6%, respectively. The shrinkage, and even the closure of hub operations, means fewer connecting flight options for passengers, leaving the pricier, non-stop tickets up for sale.

The second hardest hit airport after Memphis: Newport News in Virginia, which experienced a flight schedule shrinkage of 51%, in part due to Southwest’s cancellation of service to the city after acquiring AirTran, according to the Journal. Milwaukee, Cleveland, Allentown-Bethlehem-Easton, Key West, and Colorado Springs all saw their departing flights decrease over 40% in four years.

The Department of Justice notified the mega-carriers on June 30 that it is investigating them for possible collusion in the schedule reductions in order to boost profits. (The investigation comes less than two years after the government approved the merger of US Airways and American Airlines to create the world’s largest airline.) The consolidation in airlines has been widely blamed for fare hikes. According to an Associated Press report, a lack of competitive pressure is a major factor leading to domestic fares growing faster than inflation. Domestic fares rose 5% over the last decade after adjusting for inflation, not including the fees piled on for baggage or preferred seats.

But not everyone is convinced the consolidation is so bad for passengers. A PricewaterhouseCoopers report in 2014 found that the mega-carriers still face competition from smaller airlines, like low-cost carriers and ultra-low-cost carriers. A dramatic increase in flight departures from some airports, such as St. Pete-Clearwater and Orlando Sanford in Florida (94% and 71% jumps, respectively), underlines that trend. According to the Journal, the increases were primarily driven by new service from low-cost carriers. The PwC report also said that the consolidations have made the industry more reliable and efficient, and “made the industry’s financial outlook much stronger.”

That’s certainly true: across the airline industry, airlines are gearing up for record profits. On Thursday, Southwest reported earning a record $608 million in 2015’s second quarter. United also reported a surging second quarter on Thursday, earning $1.19 billion, up from $789 million in the same quarter last year. A week earlier, Delta posted second quarter earnings of $1.49 billion — jump of 85%. To round out the mega-carrier second quarter earning reports, American will announce on Friday. Expect big profits.

What’s more: the match—originally proposed in May 2014—seems very likely to go through. The deal is all but inked, reports The Wall Street Journal, citing unnamed sources.

Regulators from the Federal Communications Commissions are apparently in the midst of wrapping up their review of AT&T’s T potential purchase. The company already has clearance from the Department of Justice. All that’s left is for the FCC’s five commissioners, including chairman Tom Wheeler, to formally submit their approval.

As Journal reporter Thomas Gryta notes:

The transaction will make AT&T the nation’s largest pay television provider in addition to the second biggest wireless carrier at a time when companies are trying to figure out how best to handle the massive shifts among media companies as video consumption moves online. The combination will pair AT&T’s regional U-verse pay TV business with DirecTV’s satellite operation, which is nationwide but lacks a robust broad band offering.

Previously, AT&T lost $4 billion and failed to win approval for an attempted T-Mobile TMUS takeover in 2011. This time round? Apparently things are going much more smoothly.

Snowden documentary filmmaker Laura Poitras is suing the U.S. government

For the past six years, Laura Poitras has always had a homecoming party.

Each time the award-winning video journalist has attempted to re-enter the United States, border patrol has detained her, according to a lawsuit she filed against the United States government on Monday. That’s more than 50 occasions in total.

Why? That’s her question, too. Poitras, creator of the Oscar-, Pulitzer-, and Academy Award-winning documentary Citizenfour—which chronicles the exploits of the NSA whistleblower Edward Snowden—desires to know why security agents repeatedly harassed her during that period when she was working on her films.

Apparently, she had been told during one of many hours-long detainments that her name appeared on a national security threat database. After filing Freedom of Information Act requests for her records, she received few clarifying details. So she’s taking legal action.

Poitras will take the departments of justice and homeland security, as well as the Office of the Director of National Intelligence, to court. She has demanded access to the surveillance records that pertain to her.

“I’m filing this lawsuit because the government uses the U.S. border to bypass the rule of law,” Poitras said in a statement. “This simply should not be tolerated in a democracy. I am also filing this suit in support of the countless other less high-profile people who have also been subjected to years of Kafkaesque harassment at the borders. We have a right to know how this system works and why we are targeted.”

Representatives of Comcast CMCSA and Time Warner Cable TWC are preparing to meet U.S. Department of Justice officials to discuss competition concerns raised by the planned $45 billion merger of the two cable giants, the Wall Street Journal reported on Saturday.

The meeting next Wednesday would aim to negotiate possible concessions addressing those concerns, the Journal said, citing people familiar with the matter.

The paper said it would be the first time the two cable giants have met with regulators since announcing their proposed deal a year ago.

Staffers at both the Justice Department and the Federal Communications Commission remain concerned the combined company would have too much power in the Internet broadband market and would have unfair competitive leverage against TV channel owners and businesses offering online video programming, the Journal said.

Representatives of the two companies and the Justice Department did not immediately respond to Reuters’ requests for comment on the Journal report.

News of the planned meeting followed a report by Bloomberg on Friday that staff attorneys at the Justice Department’s antitrust division were nearing a recommendation to block the deal.

A spokesman for Time Warner Cable questioned the Bloomberg report, saying on Friday the company had been working productively with both the Department of Justice and the Federal Communications Commission.

A source close to Comcast said on Friday that discussions with the DOJ had been positive and that the Federal Communications Commission (FCC) was still gathering material from companies, making it early for any discussion of conditions for a deal.

The Bloomberg report said Justice Department attorneys were citing concerns for consumers as they lean against it and their review could be handed in as soon as next week. A final decision would be made by senior officials.

In its report on Saturday, the Journal said the Justice Department and the FCC were nearing the final stages of scrutinizing the deal. Discussions on potential remedies to concerns would be an indication that the two agencies had not yet made a firm or final decision on the merger, the paper said.

But it added the meeting could be the first of many and said it was not clear whether the companies could offer concessions that would satisfy the regulators.

BSI becomes first Swiss bank to settle under DoJ tax program

Swiss private bank BSI has avoided prosecution for suspected tax-related offenses by paying a $211 million penalty, becoming the first bank to reach a deal in a voluntary disclosure program being run by the U.S. Department of Justice.

The program, launched in 2013, allows Swiss banks to avoid prosecution by coming clean about their cross-border business in undeclared U.S.-related accounts, though it excluded banks already under criminal investigation in relation to their Swiss activities.

According to a non-prosecution agreement signed on Monday, BSI had for decades up to 2013 helped thousands of U.S. clients in opening accounts in Switzerland and hiding the assets and income held in the accounts from tax authorities.

BSI, which had actively welcomed clients that other banks had distanced themselves from as the U.S. began to tighten its net on tax evaders in 2009, admitted to letting clients use fake identities, anonymous debit cards and coded language to ensure their transactions were untraceable.

The bank went to egregious lengths to allow clients to cover their tracks. In some instances, U.S. clients would tell their bankers that their “gas tank is running empty” as code to indicate that they needed more cash on their cards.

BSI has now agreed to cooperate in any related criminal or civil proceedings and put better controls in place, in what lawyers expect to be the first of a flood of settlements by Swiss banks, which have come under intense pressure to give up their traditional secrecy.

The agreement prompted a stinging rebuke from Swiss finance blog Inside Paradeplatz, which wrote that BSI had betrayed Swiss banks and wealth managers “to save its own skin”, in reference to the fact that BSI provided the names of employees who had committed misconduct.

The blog said that as part of the settlement, BSI had also revealed the names of other counterparties which its clients had used to hide their assets, such as financial advisers, asset managers, accountants, lawyers and foundations.

“As such, the breach in the dam is complete,” Inside Paradplatz said. “Swiss banking secrecy is now nothing but a dead letter.”

In addition to the DoJ’s voluntary disclosure program, a smaller group of Swiss-based private banks have faced criminal investigations by U.S. authorities for allegedly helping wealthy Americans evade taxes.

BSI held and managed approximately 3,500 U.S. client accounts, including declared and undeclared accounts, with peak assets under management since August 2008 of $2.78 billion, the DoJ said. BSI’s fine corresponds to around 7.5% of this peak U.S. asset base of declared and undeclared accounts.

Italian insurance giant Assicurazioni Generali SpA ARZGY, parent of BSI, said it had provisioned for the $211 million fine in its 2014 results. The agreement paves the way for Generali to complete its sale of BSI to Brazil’s Banco BTG Pactual SA, as agreed in July.

BSI, one of Switzerland’s largest private banks, apparently had more U.S. account holders than many other banks in the program, a reason for the sizeable penalty, according to Washington, D.C., attorney Scott Michel, who represents banks and individuals who have made voluntary disclosures.

Sixty or 70 other Swiss banks are expected to strike similar agreements with the Justice Department in the coming months, Michel said.

The BSI agreement also has substantial implications for account holders, the lawyer noted.

If a U.S. taxpayer has an unreported account at a Swiss bank and enters the offshore disclosure program, the account holder has to pay a penalty equal to 27.5% of the high balance in the account, he said.

However, once a bank becomes the publicly announced subject of an investigation or enforcement action, including the execution of a non-prosecution agreement, the penalty facing a taxpayer who holds an undisclosed account rises to 50%.

“For any American with an unreported account at BSI, their effective cost has essentially doubled today,” Michel said.

The lawsuit, which was filed on Monday in federal court in New York, alleges that Deutsche Bank DB engaged in a series of transactions meant to evade federal income taxes — leaving the U.S. government “with a significant, uncollectable tax bill,” according to the Justice Department.

“Through fraudulent conveyances involving shell companies, Deutsche Bank tried to make its potential tax liabilities disappear,”Manhattan U.S. Attorney Preet Bharara said in a statement. “This was nothing more than a shell game.”

The government went on to describe the alleged fraud, which included the German bank’s creation of three separate “shell companies” as well as a series of subsequent transactions involving those companies that federal authorities claim were designed to avoid federal tax laws.

Deutsche Bank responded to the allegation in a statement to Fortune, saying: “We fully addressed the government’s concerns about this 14-year old transaction in a 2009 agreement with the IRS. In connection with that agreement they abandoned their theory that [Deutsche Bank] was liable for these taxes, and while it is not clear to us why we are being pursued again for the same taxes, we plan to again defend vigorously against these claims.”

Thanks, banks! DOJ has collected a record $24 billion in fines this year

A number of massive settlements with top U.S. banks paved the way for a record year for the U.S. Justice Department.

The DOJ said on Wednesday that it collected a record $24.7 billion in civil and criminal penalties stemming from financial fraud cases and other matters during the 2014 fiscal year, which ended Sept. 30. That total, which includes about $11 billion collected by the DOJ on behalf of other federal agencies, more than triples the $8 billion the agency collected during the previous year.

The bulk of the collections made in the most recent year came from large financial institutions settling claims related to the 2008 financial crisis, the DOJ said, “including significant amounts paid by JPMorgan and Citigroup Inc.”

JPMorgan Chase JPM reached a $9 billion settlement with the U.S. government a year ago to resolve claims related to the bank’s sale of mortgage-backed securities in the lead-up to the financial crisis. (JPMorgan also agreed to pay about $4 billion in consumer relief.) Citigroup C later reached a similar deal with the DOJ over the summer that included a $7 billion penalty. A similar settlement with Bank of America BAC later trumped both of those penalties, though, with the bank agreeing to pay $16.7 billion, including $7 billion for consumer relief, in August.

U.S. Attorney General Eric Holder said in a statement that the record 2014 fiscal year “shows the fruits of the Justice Department’s tireless work in enforcing federal laws; in protecting the American people from violent crime, national security threats, discrimination, exploitation, and abuse; and in holding financial institutions accountable for their roles in causing the 2008 financial crisis.”

The DOJ also pointed to the fact that it has already collected “hundreds of millions in fines” stemming from the ongoing international probe into banks’ alleged rigging of the London Interbank Offered Rate, or LIBOR.

JPMorgan faces criminal probe into its foreign-exchange trading business

JPMorgan Chase is facing a criminal probe by the Justice Department into its foreign exchange trading business, according to a regulatory filing on Monday.

The bank said that U.S. financial regulators including the Commodity Futures Trading Commission are conducting civil investigations. European regulators are also conducting an inquiry.

JPMorgan is one of several large banks currently in settlement talks with regulators over alleged rigging of the global currency market. The bank said in its filing that the inquiry is focused on its spot currency exchange trading activities and the internal controls related to them.

The bank says it is cooperating with the assorted investigations and is in talks with the DOJ and other regulators, though JPMorgan noted that “there is no assurance that such discussions will result in settlements.”

The banking giant also said that it now estimates its “reasonably possible losses” from legal matters could amount to as much as $5.9 billion, up from the bank’s previous estimate of $4.6 billion.

JPMorgan’s filing came on the same day that HSBC HSBCset aside $1.6 billion for legal costs, some of which is earmarked for an ongoing investigation into that bank’s foreign exchange trading business by U.K. regulators. Last week, Citigroup C — another bank in settlement talks with regulators — slashed its previously-reported third-quarter profits in order to factor in an additional $600 million in legal costs.

JPMorgan’s shares JPM were down about 0.8% in after-hours trading following Monday’s announcement.

Buffett’s Berkshire to pay $896,000 over reporting violation charges

Berkshire Hathaway has agreed to pay a $896,000 civil penalty in order to settle charges that it failed to give federal regulators advance notice before significantly increasing its stake in Chicago-based drywall maker USG last year.

Both the U.S. Department of Justice and Federal Trade Commission announced the settlement with billionaire Warren Buffett’s investment vehicle on Wednesday. The regulators said that Berkshire violated pre-merger reporting laws in December when it failed to provide advance notice before it exchanged $243.8 million of USG USG convertible notes for 21.39 million common shares, increasing Berkshire’s stake in USG to roughly 28% from about 15%. Regulators say the size of Berkshire’s increased stake was more than three times the minimum to require pre-transaction reporting.

What’s more, the FTC says the alleged violation came just a few months after Berkshire produced a similar violation when it increased its stake in financial services company Symetra Financial. The FTC chose not to punish Berkshire for that alleged violation, with the commission instead deciding to take Buffett’s firm on its word that it would comply with the Hart-Scott-Rodino Act’s filing requirements going forward.

“Although we may not seek penalties for every inadvertent error, we will enforce the rules when the same party makes additional mistakes after promises of improved oversight,” Deborah Feinstein, director of the FTC’s competition bureau, said in a statement. “Companies and individual investors alike should ensure that they have an effective program in place to monitor compliance with HSR filing requirements.”

Of course, the civil penalty amounts to little more than a slap on the wrist for Berkshire, which ranks fourth on the Fortune 500 list with more than $182 billion in revenue last year.

Citigroup is terrible at negotiating with the government

On Monday, the giant bank agreed to pay $7 billion to settle government claims that Citigroup sold mortgage bonds that its bankers knew were rotten in the years leading up to the financial crisis. Shares of Citi C are up today. But they are still down nearly 7% this year. By comparison, Bank of America BAC stock is up slightly. And shares of Wells Fargo WFC are up nearly 15%.

Bank analyst Mike Mayo of CLSA seemed shocked and disappointed that Citi had agreed to settle for so much during a call with Citi’s top management on Monday morning. “Why did you settle for what many people think is a huge amount?” he asked Citi CEO Michael Corbat on a conference call with other analysts. “It’s much more than I or anyone I talk to on Wall Street thought it would be.”

Corbat answered that he thought the settlement was fair.

Was it? If you factor in Citi’s original offering to the government, the answer would have to be no. Citi opened the negotiations with an offer to settle for around $350 million, or just 5% of what it eventually paid. The bank argued that it underwrote fewer mortgage-backed securities than its larger banking competitors so it should have to pay less.

JPMorgan paid $13 billion to settle its mortgage cases with the government. Based on that, an earlier analysis of the JPMorgan suit suggested that the Citi’s fine should have been around $1 billion.

But the government said it wasn’t about size. It was about behavior, and Citi’s was worse than the other banks. On Monday morning, TheWall Street Journal reported that Attorney General Eric Holder would detail Citi’s “egregious misconduct.” Based on that, it seemed like we were in for another round of cringe-worthy e-mails from Wall Street.

Not really.

In fact, the Citi settlement includes just a few sentences from one e-mail that it notes came early on in the process of putting together one particular deal. “Went thru the Diligence Reports and think that we should start praying,” the Citi trader wrote, according to the settlement. “I would not be surprised if half of these loans went down.”

That’s not great. But it’s nothing like the Li-bros promising bottles of Bollinger for rate rigging, or the Morgan Stanley e-mails that came out in a civil case in which bankers debated if they should call a mortgage bond deal “shitbag” or “Mike Tyson’s punch-out.” In Citi’s case, there’s no, “LOL. You know we are going to do the deal anyway,” response. Or something like, “Thanks for your concerns. Next time please don’t put those in e-mails.”

If the above-mentioned e-mail is the smoking gun, all Holder is showing us is the picture of it before it went off.

We actually have no idea how the trader’s superiors or colleagues responded. The settlement doesn’t say so. Some of the loans could have been kicked out of the pool as a result of that e-mail, which we know happened at times, based on another part of the settlement. Or maybe they found a flaw in that particular trader’s analysis.

All the suit says is that Citigroup ended up securitizing loans from that particular pool. But there are a lot of steps between saying, “Hey, there’s something fishy” and an actual deal. And if such communications were so damaging, why didn’t Holder and the Justice Department include them?

In another deal, according to the settlement, an outside advisor found that 32% of a sample of the loans Citi was including in a deal were of lower quality than Citi was letting on. Citi kicked some loans out and had the advisor reexamine others. Still, in the end, Citi should have known that 20% of the loans it sold to investors were likely to go bust.

Again, not great. But not much worse than JPMorgan. Its settlement with the government noted that one advisor initially determined that 27% of the loans JPMorgan was considering selling to investors didn’t meet the standards of the deal. Eventually, about half of those loans were kicked out.

Unlike JPMorgan’s settlement, though, Citi’s covered not just its straight mortgage bond deal, but the $100 billion in derivative CDOs the bank sold based on those deals and others. So, you would have expected Citi to pay the government more, perhaps double, than what was expected. After all, earlier analysis on a potential government settlement was based on Citi’s $100 million in mortgage bonds. CDOs generally created more losses for investors than mortgage bonds. So, perhaps $3 billion would make sense.

But there is pretty good evidence that the government had long stopped investigating Wall Street’s CDO deals. Back in October 2011, after paying a $285 million fine to the Securities and Exchange Commission for one deal, Citi told ProPublica that, unofficially, the settlement covered all of its CDOs. Goldman Sachs GS appears to have struck the same agreement.

What’s more, the part of Monday’s settlement where it lays out what Citi did wrong doesn’t mention a single CDO deal.

The big difference, which may explain why Citi is paying more, is that none of the deals in question were inherited as part of an acquisition. JPMorgan’s main argument for leniency from the government was that two-thirds of the deals that it was being fined for were done by either Bear Stearns or Washington Mutual, two banks that JPMorgan bought at the height of the financial crisis. By rescuing two troubled banks, those acquisitions arguably helped the economy. That argument seems to have worked with the government.

Citi couldn’t argue that. All of its deals were its own. So it did fewer deals. That clearly didn’t work. Perhaps it should have argued that its deals didn’t lose as much for investors. Did they? We don’t know. The government’s settlement with Citi says nothing about how much investors lost, something that seems relevant when assigning fines.

In general, Citi has paid less in fines than other banks. Perhaps this was a bit of catch up. Then again, Citi is still looking at potential fines for manipulating Libor and its lending troubles in Mexico. So it’s not like this is the last fine Citi’s going to pay.

One observation to take away from this: Bank of America investors should be very scared, as that bank is still working on its deal with the government. And right now, the government is clearly pushing for banks to pay bigger and bigger fines.